The Best and Worst of the Beer Stocks

Ed Ponsi

While many drinking establishments remain closed due to Covid-19, the consumption of adult beverages remains a constant. The question is, is the brand of beer that's sitting in your fridge the one you want to own in your portfolio?

While some sectors, such as banks and brokers, tend to have stocks with similar looking chart patterns, beer stocks are completely non-correlated at the moment. Some are bullish and some are bearish. What's the worst beer stock to own right now?

Molson Coors (TAP) chart by TradeStation

At the bottom of the barrel is Molson Coors Beverage Inc., (TAP), which has spent the last six months forming a descending triangle pattern (black dotted lines). That pattern projects Molson Coors to the high 20's. 

Molson Coors is trading below its 50 day moving average, in blue, and its 200 day moving average, in red. Notice how the volume picks up on days when the stock is falling, as indicated by the red volume bars. This is a sign that institutional traders could be pouring this stock down the drain. 

Boston Beer (SAM) chart by TradeStation

What's the best beer stock right now? That honor goes to Boston Beer (SAM), brewer of Sam Adams. While Molson Coors has formed a descending triangle, this stock has formed the opposite pattern - an ascending triangle. 

Boston Beer broke out of that triangle on Tuesday. The stock also received a buy signal from its MACD (moving average convergence divergence) indicator, shaded in yellow. Based on the above information, I'm projecting Boston Beer to $1000 per share. 

Bottom line, the beer that tastes best in your mug might not be the one you want in your portfolio. 

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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.